Carbon Offset/Carbon Credit Market

The global carbon credit market is experiencing healthy growth, driven by strengthening global efforts to combat climate change, increasing corporate net zero commitments, and changing regulatory frameworks. The carbon credits market is highly dynamic, offering promising opportunities across both voluntary and compliance segments, and continues to be at the core of international sustainability initiatives.
Climate change has made carbon emissions one of the major challenges. Governments, industries, and consumers are progressively focused on reducing greenhouse gas emissions. One of the central mechanisms gaining prominence is the market, a market-based approach that allows emission reductions to be traded, bought, or sold.

What is the Carbon Credit Market?

A carbon credit is essentially a permit that allows the holder to emit one metric ton of CO2 (or an equivalent amount of another greenhouse gas). Entities that reduce their emissions below a set level can sell their excess credits to those that exceed their quotas who must purchase credits to comply with laws or voluntary commitments.

The global carbon credit market can be divided into two main types:

• Compliance market: where governments or regulatory bodies mandate emission limits. Companies must reduce emissions or buy credits/offsets.
• Voluntary market: where companies or individuals purchase credits to offset their emissions beyond what is legally required (e.g. to meet sustainability goals, net-zero pledges, or to appeal to consumers).

Carbon Credit Market Size & Growth Projections

The global carbon credit market (carbon offset / carbon credit) is projected to grow from USD 414.8 billion in 2023 to USD 1,602.7 billion by 2028, at a compound annual growth rate (CAGR) of around 31.0%.

Several businesses are now adopting this technique of partially using carbon credits, which is benefiting them significantly. They are getting involved in projects and activities that are helping them generate offsets. They use as many credits as they want according to the limit set for a project and if they have a few lefts, they are using them later for another project. Hence, these factors help in driving the carbon credits market.

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This impressive growth is driven by several factors:

1. Increasing regulatory pressure: more regions are implementing carbon pricing, emissions caps, carbon taxes, and stricter environmental regulations.
2. Corporate net-zero targets: many companies have committed to reach net-zero greenhouse gas emissions, pushing demand for both compliance credits and voluntary offsets/removals.
3. Technological advances in removal / sequestration: innovations in capturing carbon (e.g., direct air capture, carbon capture & storage, biochar, etc.) are making removal projects more feasible and scalable.
4. Nature-based solutions & forestry: these remain dominant, especially in voluntary markets, because they often provide co-benefits (biodiversity, soil health, community benefits).

Key Segments: What is Driving the Carbon Credit Market

• Project types: Carbon offset/carbon credit projects fall broadly into avoidance/reduction and removal/sequestration. Nature-based sequestration (forests, soil carbon) and technology-based removal (direct air capture etc.) are both important. The removal / sequestration segment is expected to be one of the fastest growing.
• Geography / Regions: Europe is expected to remain a leader in the global carbon credit market over the forecast period, driven by strong regulatory frameworks and investments in green technologies.
• Voluntary vs Compliance: While compliance markets remain essential, the voluntary market is growing strongly with forestry, land-use, renewable energy, waste disposal, industrial manufacturing, energy efficiency/fuel switching among the major project types.

Key Players in the Carbon Credit Market

The global carbon credit market is dominated by a few major players that have a wide regional presence. Some of the prominent companies include:

• South Pole Group (Switzerland)
• 3Degrees (US)
• Finite Carbon (US)
• EKI Energy Services Ltd. (India)
• NativeEnergy (US

The market is witnessing ongoing partnerships, innovative product launches, and technology adoption as companies work to increase their market share and expand their geographic footprint.

What the Carbon Credit Market Report Tells Us

A recent carbon credit market report provides key insights:

• The carbon credit market size, as noted, is expected to grow throughout the forecast period (from USD 414.8 billion in 2023 to USD 1,602.7 billion by 2028).
• CAGR over that period is 31.0%.
• Forestry and land use (nature-based removal) is among the fastest growing both in voluntary and compliance markets.
• Technology-based removal (direct air capture, carbon capture utilization & storage, biochar etc.) is gaining traction, expected cost declines and policy rewards will drive this segment.

Implications & Future Outlook

• For businesses: Businesses with lower emissions intensity can make stronger carbon commitments and use credits with co-benefits to support their brand values and positioning in the market.
• For policy makers: Clear, robust regulatory frameworks (for both compliance and voluntary markets), transparency in standards, and incentives/subsidies for removal technology will be vital.
• For investors: Carbon credit projects are emerging as a new asset class but risk due diligence (verification, permanence, etc.) is essential.
• For communities & nature: Nature-based projects especially provide multiple synergies, climate mitigation plus biodiversity, livelihoods, and ecosystem services.

With the ongoing evolution of the carbon credits market, organizations and investors positioned for technological innovation, compliance, and verified sustainability impacts will lead the way in shaping global climate action and unlocking significant new revenue streams.

The global carbon credit market is one of the fastest growing sectors in climate-finance, with market size poised for explosive growth over the next few years. For anyone concerned about sustainability, net-zero goals, or decarbonization, staying ahead of trends in carbon credit is essential.

Related Reports:

Carbon Offset/Carbon Credit Market by Type (Voluntary Market, Compliance Market), Project Type (Avoidance/Reduction Projects, Removal/Sequestration Projects (Nature-based, Technology-based)), End-User and Region - Global Forecast to 2028